Automotive News Europe — 2026-08-02
Automotive Industry
Volkswagen Group CEO Oliver Blume faces perhaps the most difficult challenge of his tenure: convincing the automaker’s powerful and often competing stakeholders that deeper restructuring is unavoidable.
VW is preparing what executives describe as the most extensive overhaul in its history after Blume concluded that the company’s traditional model of designing and producing vehicles in Germany and exporting them globally is no longer sustainable.
Weakening demand in China and the U.S., high manufacturing costs in Germany, excess capacity in Europe and growing trade barriers have combined to erode the group’s competitiveness.
Following the restructuring program launched in 2024 that targeted 50,000 jobs, management is now weighing a second round of measures that could eliminate another 50,000 jobs.
Plant closures in Germany are also under consideration, with facilities including Emden, Hanover, Zwickau and Audi’s Neckarsulm factory lacking confirmed production beyond their current vehicle programs.
The economic rationale is increasingly clear, but securing agreement inside the automaker’s unique governance system is far less straightforward.
Blume and Chief Financial Officer Arno Antlitz have argued that VW Group must substantially reduce its German cost base if it is to restore long-term profitability. That could involve shifting more production to lower-cost plants in Eastern Europe while simplifying vehicle architectures, reducing model variants and cutting engineering and administrative positions.
Higher-cost German factories with uncertain future model allocations would likely come under increased scrutiny as those plans advance.
Controlling Porsche-Piech families support restructuring
The Porsche and Piech families, VW Group’s controlling shareholders through Porsche SE, have strong financial incentives to back deeper reforms.
The holding company is heavily exposed to the performance of both VW Group and Porsche, whose declining share prices have forced Porsche SE to recognize billions of euros in impairment charges in recent years. The group also continues to service debt incurred to acquire its blocking minority stake in Porsche following the sports-car maker’s 2022 initial public offering.
The families have consistently favored measures aimed at improving profitability. Wolfgang Porsche, the family head, has repeatedly criticized what he sees as the outsized influence of labor representatives within VW.
Their position is reinforced by VW Group’s supervisory board chairman Hans Dieter Poetsch, who is also chief executive of Porsche SE.
Labor holds significant influence
The biggest obstacle to sweeping restructuring remains VW Group’s powerful labor representatives in Germany.
The IG Metall union has exceptionally high membership levels across VW’s German workforce, giving employee representatives substantial influence on the supervisory board. Works Council Chair Daniela Cavallo has repeatedly ruled out factory closures, describing them as a red line.
If workforce reductions become necessary, labor leaders insist they should be achieved through voluntary departures and severance agreements rather than compulsory layoffs. In return, unions could seek long-term employment guarantees similar to those negotiated at Porsche, which will eliminate 9,000 jobs by 2035 in a deal that protects its main German sites and rules out compulsory layoffs.
VW’s home state can block key decisions
Lower Saxony, the German state where VW Group is based, remains another decisive player.
Lower Saxony owns 20 percent of VW Group. Under Germany’s Volkswagen Law designed to prevent hostile takeovers, the state holds a blocking minority that gives it veto power over major corporate decisions.
While the state government rarely intervenes in day-to-day operations, protecting industrial employment remains a central political objective. That makes any proposal to close VW’s Emden or Hanover plants in Lower Saxony, which together employ more than 20,000 workers, particularly difficult to implement.
Qatar’s strategic stake adds complexity
Qatar, VW’s third-largest shareholder, controls 17.4 percent of the company’s voting rights through Qatar Holding.
The Gulf state’s investment is primarily financial, reflecting its broader strategy of diversifying beyond hydrocarbons. In most cases, Qatar’s interests align with management’s objective of preserving shareholder value.
However, geopolitical considerations can complicate decision-making. According to people familiar with the matter, Qatar has opposed a proposed partnership between VW and Israeli defense contractor Rafael involving production at the automaker’s Osnabrück plant, highlighting how non-commercial considerations can influence shareholder dynamics.
A defining moment amid U.S. tariffs, China
Blume’s restructuring effort comes after previous attempts to reduce capacity stopped short of factory closures. Earlier labor agreements preserved Germany’s manufacturing footprint while limiting wage concessions, but they left much of VW’s structural cost disadvantage intact.
With U.S. tariffs weighing on exports, China’s market becoming increasingly difficult for foreign automakers and Germany’s manufacturing costs remaining among the highest in Europe, investors are increasingly questioning whether incremental measures will be sufficient.
For Blume, the challenge extends beyond identifying where costs should be cut. It is persuading VW’s uniquely powerful coalition of shareholders, politicians and labor representatives that preserving the status quo now poses a greater risk than pursuing painful reform.